HAMBURG, Germany—Evotec AG and Facio Therapies have entered into an agreement aimed at the identification of compounds showing
activity as a potential treatment to stop the progression of FSHD (facioscapulohumeral dystrophy), a muscle wasting disease.

Facio Therapies was established in 2014 with a single focus: to find a cure for FSHD, a muscle-wasting disease that generally progresses from the face
(“facio”) to the shoulders (“scapulo”) and the upper arms (“humeral”), and sometimes also to the legs. About 20 percent
of people with FSHD are eventually confined to a wheelchair.

Worldwide, FSHD devastates the lives of over half a
million people and those close to them. The loss of muscle strength has a huge impact on daily life. Living with FSHD means living with pain, fatigue and
social isolation. Above all, the future becomes uncertain because the course of the disease is unpredictable. Currently, no therapy for FSHD is available
other than forms of temporary symptomatic relief.

“Facio came to Evotec directly based on its reputation as
a known expert in the industry in drug discovery,” notes Gabriele Hansen, vice president of corporate communications and investor relations at Evotec.
The project with Facio entails the setup and execution of an automated high-throughput screen to identify small molecules having a positive effect on SMCHD1
and DUX4 activity in human FSHD-affected muscle cell lines. The compounds that show promising activity in this screen are expected to be available in the
first half of 2016. These compounds will require extensive further testing to produce compounds that are suitable for the development of a therapeutic for
the treatment of FSHD, the release announcing the partnership states. All in all, the partners agree that this is a challenging process that may take several
years before clinical testing in humans can begin.

“The start of our drug discovery program is a significant
step forward in our pursuit to overcome FSHD,” said Facio’s Managing Director David Dasberg. “Evotec is a leader in the field of drug
discovery, and their expertise with muscle tissue will allow us to move forward as fast as possible.”

Dr
Mario Polywka, chief operating officer of Evotec, commented: “We are very excited about the opportunity to collaborate with Facio on this important
disease. With our world-leading expertise in tissue analysis and high-throughput screening, we are confident to add real value to the progression of this
program.”

In 2012, Evotec and the Jain
Foundation initiated a research project to explore and validate cell-based assay principles useful for high-throughput screening using dysferlin
deficient skeletal muscle cells. “The aim of this project is to discover compounds that improve the well-being of these dysferlin- [a muscle protein
associated with several forms of muscular dystrophy] deficient skeletal muscle cells,” Hansen explains. “In 2013, Evotec and the Jain Foundation
extended and expanded their collaboration to leveraging Evotec’s assay development and screening capabilities.”

In terms of the scope of the project, “The manpower and duration of the project will be led by the science and the needs of the project to
drive it to a PDC,” Hansen states. No financial details were disclosed.

Facio Therapies is a Netherlands-
based company aiming to overcome FSHD by developing a causal therapy that restores the repression of toxic DUX4. Facio works with leaders in the field to
develop an affordable and accessible causal therapy in the most expeditious fashion possible. Being by and for people with FSHD, the business approach is to
have a positive impact on lives rather than maximize financial gain. Facio’s founders—Kees van der Graaf (Netherlands), Bill Moss (Australia) and
Neil Camarta (Canada)—are business leaders from the FSHD community.

The etiology of the disease is well
understood. FSHD is hereditary. If one parent is affected, children have a 50-percent chance of inheriting the same genetic defect. About 95 percent of
people with FSHD have a defect on chromosome 4; this is known as FSHD1. The remaining 5 percent have a defect on chromosome 18, which is called FSHD2.

Chromosome 4 contains a series of repeated pieces of DNA, so-called D4Z4 repeat units. People without FSHD have 11-100
D4Z4 repeat units. In people with FSHD1, the D4Z4 array is shortened to 1-10 units. In contrast, people with FSHD2 have a normally sized D4Z4 array. The
defect in FSHD2 is a mutation in a gene on chromosome 18 called SMCHD1.

FSHD1 and FSHD2 are clinically
indistinguishable. This suggests there is a common factor—and, in fact, there is. Both types of FSHD result in the production of a protein called DUX4.
DUX4 plays a normal role in early fetal development, but is highly toxic when produced in muscle tissue. In people without FSHD, the DUX4 gene is repressed.
In people with FSHD (whether FSHD1 or FSHD2), the DUX4 gene is “de-repressed” and produces its toxic protein. A causal FSHD therapy needs to take
the DUX4 gene back to its normal repressed state.